What is the rate of return on your investment

Assignment Help Financial Management

Reference no: EM13724930

Suppose that at time 0 you buy a 6%-coupon 30-year bond priced at par, and at time 0.5 you sell this bond at a yield of 8%.

What is your time 0.5 payoff per $1 of initial investment?

What is the rate of return on your investment (annualized, with semi-annual compounding)?

Reference no: EM13724930

Questions Cloud

What annually compounded interest rate : Trent receives a check for $20,000 from his parents for his 20th birthday. He decides to deposit this money into an account earning a 9% interest rate compounded monthly, forever.

Compute the amount of the after tax income : The treasurer of Kelly Bottling Company (a corporation) currently has $150,000 invested in preferred stock yielding 8 percent. He appreciates the tax advantages of preferred stock and is considering buying $150,000 more with borrowed funds. The cost ..

Fiscal years-use the financial statements : DuPont analysis for Google and Yahoo companies for each of the last five fiscal years; use the Financial Statements filed with the SEC. This submission must be an Excel spreadsheet containing the calculated values.

Yield curve is upward-sloping and there is no arbitrage : Suppose the yield curve is upward-sloping and there is no arbitrage. Two ordinary fixed coupon bonds, bond A and bond B, have the same maturity, but bond A has a lower yield. Which bond has the higher coupon?

What is the rate of return on your investment : Suppose that at time 0 you buy a 6%-coupon 30-year bond priced at par, and at time 0.5 you sell this bond at a yield of 8%. What is your time 0.5 payoff per $1 of initial investment? What is the rate of return on your investment

When the economy goes into a recession : When the economy goes into a recession, do we expect spreads between corporate bonds and treasuries to widen or contract? Why?

Expect spreads between corporate bonds-treasuries to widen : When the economy goes into a recession, do we expect spreads between corporate bonds and treasuries to widen or contract? Why?

Zero-coupon bond with exactly same market value and duration : Suppose you have a short position in a 30-year 6%-coupon bond and a long position in a zero- coupon bond with exactly the same market value and duration. If all zero rates fall by 20 basis points, will your net position rise or fall in value? Explain..

What is the sustainable growth rate and required return : Abbott Laboratories (ABT) engages in the discovery, development, manufacture, and sale of a line of health care and pharmaceutical products. Below you will find selected information from Value Line. Use the Value Line estimated 2009 figures as the ac..

User Account

All Pages